Reserve Bank of India Emphasizes Cyber Security in Financial Sector

The Reserve Bank of India (RBI) Governor, Sanjay Malhotra, has stressed the importance of enhancing cyber security in the financial sector. In his announcement during the RBI’s bi-monthly monetary policy, Malhotra called for the implementation of second factor authentication (2FA) for all international online transactions, underscoring its role in bolstering digital security.

Enhancing Cyber Security in Banking and Payments

The RBI has been actively working to improve digital security in banking and payments. Malhotra proposed extending additional authentication measures for international digital payments to offshore merchants that are capable of supporting such protocols. A draft circular for feedback from stakeholders is expected to be issued soon.

Rapid Digitalization and Cyber Risks

The rapid digitalization of financial services has increased convenience, but it has also heightened exposure to cyber risks. The rise in digital frauds, according to Malhotra, requires collective action from all stakeholders in the sector.

RBI’s Initiatives to Combat Cyber Threats

In an effort to combat cyber threats and malicious activities such as phishing, the RBI plans to implement an exclusive domain, ‘bank.in,’ for Indian banks. This initiative, aimed at enhancing trust and streamlining secure financial services, is set to begin in April 2025, with the Institute for Development and Research in Banking Technology (IDRBT) serving as the exclusive registrar.

Additionally, a ‘fin.in’ domain is planned for non-bank entities in the financial sector, further solidifying India’s efforts to improve cyber security in the financial services industry.

Conclusion

The RBI’s emphasis on cyber security in the financial sector is crucial in mitigating the risks associated with digital transactions. By implementing robust incident response and recovery mechanisms, banks and non-bank financial companies (NBFCs) can ensure operational resilience and protect their customers’ sensitive information.

Published On Feb 8, 2025 at 09:35 AM IST

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